German leasing company Grenke has reported a significant rise in profitability for the first half (H1) of 2024, with group earnings increasing by 11.3% to €45m.
The company attributed the growth to a substantial increase in new business and strategic improvements within the company.
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The company’s performance in H1 2024 was strengthened by a notable rise in new business, which led to a record-high lease receivables volume of €6.1bn as against €5.4bn a year ago.
The company’s cost-income ratio (CIR) also improved, decreasing to 57.1% from 58.3% in the previous year, indicating enhanced operational efficiency.
In the second quarter (Q2) of 2024, Grenke’s upward trajectory continued. Interest income rose by 23.5%, reaching €140.3m. Despite higher interest expenses for refinancing, net interest income grew by 7.6%, amounting to €90.4m.
The company’s operating results for Q2 2024 also saw a significant increase, rising by 17% to €33.4m. Group earnings experienced a modest rise of 2.6%, reaching €25.2m. The CIR saw a further improvement to 56.3% year-on-year.
However, expenses for the settlement of claims and risk provision increased to €28.3m.
The average number of employees rose by 6.2% to 2,180. Staff costs correspondingly increased to €48.1m.
As of 30 June 2024, Grenke’s liquidity position stood at €565.5m. The company issued a €500m benchmark bond in May to finance future leasing activities. The equity ratio remained strong at 18.3%, and the return on equity (RoE) improved to 9.7% for Q2 2024.
Looking ahead, Grenke predicts leasing new business to be between €3bn and €3.2bn for the financial year, with expected group earnings ranging from €95m to €115m.
The company noted that it anticipates maintaining a balance sheet equity ratio above 16%, assuming the loss rate remains below 1.5% and considering investments in digitalisation.
Grenke CEO Dr Sebastian Hirsch said: “Despite the continued challenging market conditions, we remain on track. Our robust growth and advancing efficiency are increasingly translating into improved profitability.
Grenke CFO Dr Martin Paal said: “Our issue of a benchmark bond is further evidence of our refinancing strength and secures our growth. Thanks to our cost management, we have improved our cost-income ratio and are on target for the half-year overall.”
